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Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
Bank Loan Ratings | 90.00 | ACUITE BBB+ | Stable | Upgraded | - |
Total Outstanding Quantum (Rs. Cr) | 90.00 | - | - |
Total Withdrawn Quantum (Rs. Cr) | 0.00 | - | - |
Rating Rationale |
Acuité has upgraded its long-term rating to ‘ACUITE BBB+’ (read as ACUITE triple B plus) from ‘ACUITE BBB’ (read as ACUITE BBB) on the Rs.90.00 Cr bank facilities of Radha Marketing (RM). The outlook is ‘Stable’. |
About the Company |
Mumbai-based, RM was established as a proprietorship firm in 1997 by Mrs. Kamla Kishnani. Subsequently, it was converted into a partnership between Mr. Pratik Kishnani and Ms. Nikita Kishnani in 2013. The firm is an authorized distributor for AB-InBev, Radico Khaitan Ltd., Bacardi India Pvt. Ltd, among others for their various brands of beer and spirit products. The distribution region is central and western Mumbai. |
Analytical Approach |
Acuité has taken a standalone view of the business and financial risk profile of RM to arrive at the rating. |
Key Rating Drivers
Strengths |
Established track record of operations and experienced management |
Weaknesses |
Working capital intensive operations |
Rating Sensitivities |
> Growth in revenue with sustainability of the profitability margins. |
Material covenants |
None |
Liquidity position: Adequate |
The firm has an adequate liquidity position marked by adequate net cash accruals against its maturing debt obligations. The company generated cash accruals of Rs.8.00 crore in FY2022 compared against the maturing debt obligation of Rs.1.15 crore over the same period. The cash accruals of the firm are estimated to remain in the range of Rs.14.57-20.43 crore during 2023-25 period while its maturing debt obligations is estimated to be in the range of Rs.1.35- 3.23 crore during the same period. The company’s reliance on working capital borrowings is on a higher side marked by average utilization of working capital limits of ~82 percent during the last six months period ended October 2022. The firm maintains unencumbered cash and bank balances of Rs.4.00 crore as on March 31, 2022. The current ratio stood at 1.38 times as on March 31, 2022. |
Outlook: Stable |
Acuité believes that RM will maintain a ‘Stable’ outlook over the medium term owing to its experienced management and long track record of operations. The outlook may be revised to 'Positive' if the firm sustains the growth in its revenues while maintaining its profitability margins and capital structure. Conversely, the outlook may be revised to 'Negative' in case the firm registers lower than expected growth in revenues and profitability or deterioration in its working capital management or larger-than-expected debt-funded capex leading to deterioration in its financial risk profile and liquidity. |
Other Factors affecting Rating |
None |
Particulars | Unit | FY 22 (Actual) | FY 21 (Actual) |
Operating Income | Rs. Cr. | 283.08 | 144.96 |
PAT | Rs. Cr. | 7.92 | 4.35 |
PAT Margin | (%) | 2.80 | 3.00 |
Total Debt/Tangible Net Worth | Times | 1.89 | 1.96 |
PBDIT/Interest | Times | 3.55 | 2.88 |
Status of non-cooperation with previous CRA (if applicable) |
None |
Any other information |
None |
Applicable Criteria |
• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Trading Entitie: https://www.acuite.in/view-rating-criteria-61.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
Note on complexity levels of the rated instrument |
In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in. |
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Contacts |
Analytical | Rating Desk |
About Acuité Ratings & Research |
Acuité Ratings & Research Limited | www.acuite.in |